Extend Home Closing Deadline For Tax Credit: Senator Reid

From your mouths to the Senate Majority Leader's ears. You may recall onTuesday we all discussed the home buyer tax credit, and specifically how many potential buyers rushed in to sign contracts by the April 30th deadline but wouldn't make it to the June 30th closing deadline.

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US Senate Majority Leader, Senator Harry Reid

Now Senate Majority leader Harry Reid (D-Nev.) is offering an amendment to the American Jobs and Closing Tax Loopholes Act of 2010, to extend the closing deadline to September 30th. Again, no new buying opportunities here, just a longer period to close.

We know the tax credit juiced contracts signed for new and existing home sales, just take a look below at the "Pending Home Sales Index" from theNational Association of Realtors, which is based on contracts signed for existing homes.

Still 58 of you, so far, weighed in on the blog, many of you arguing that the tax credit muddied the recovery more than helped it. Some experts in the field were quoted in there as well, so check it out.

I spoke with Senator Reid's office after the announcement, and spokesman Jim Manley said their chief concern, especially in their home state of foreclosure-ridden Nevada, is timing to complete short sales. That's where the bank allows the troubled borrower to sell for less than the value of the mortgage. Here's Manley's full explanation:

"The Realtors believe there will be a lot of homebuyers who will not be able to meet the June 30 deadline through no fault of their own. There are a lot of transactions that need to be closed which is overwhelming the system. And many of the homes that are being bought are short sales which require the sellers lending institution to agree to take accept less than full payment on the outstanding mortgage. The financial institutions are taking a very long time to come to that decision and the home buyer is helpless to move the process along. This amendment gives those homebuyers an additional three months to close the transaction."